This Article is About
long term investment
s real estate
lending institutions
traditional loan
tight grip
owning a home
credit scores
home ownership
Rent To Own - Is It Cheaper To Rent Or Own?
Join 1000's of Authors at StreetArticles Today!

One of the questions that keeps arising in today's real estate market from buyers is: it cheaper to rent a place to live than it is to own? That question is particularly important when there seems to be no end to the slippery-slide of declining home values.

While there is no one answer that fits everyone's circumstances, owning a home in the long run will most likely be cheaper for those that look at it as a long-term investment. Yes, many people's long-term investment went upside down in the last few years, but historically over many, many years, the trend is that home values rise.

Also consider that all of those people who lost, walked away or sold homes still have to have some place to live, and one aspect of a rent payment is - it will increase. Typically 5% annually on average. A locked in mortgage rate won't change unless you refinance, and especially for today, rates haven't been this low in a long time.

Ginnie Mae estimates that a homebuyer's mortgage is less than a rent payment after as soon as six years, when comparing a $110,000 home with a $1,000 mortgage to an $800 rental payment, adding the average annual rent increase. Also consider the tax benefits with having a mortgage - you can write off the interest you pay every year, plus, if you are able, you can pay your mortgage off faster and save a lot of money in the longer-term.

However with the tight grip our lending institutions have on granting loans - it seems they only give loans to those who don't need them. That has always been true and probably won't change, however ultimately they need to make loans to those who do need them in order to survive.

Many Americans today have recently become 'economically challenged,' affecting credit scores and the ability to secure a traditional loan. One way to still get started toward home ownership is to look into rent to own homes and see if that is a good option for your situation.

As a rent to own buyer you will be paying a monthly amount slightly higher than rent and the sale price of the home will probably be slightly higher than traditional homes for sale in the same neighborhood. It will take you a little more money 'down' to get into a rent to own home than you would pay for a first, last and damage deposit, but the money you put down will go toward the down payment or the price of the home when the lease ends and you purchase the home. Some home sellers and rent to own programs will allow a portion of your payments to go directly towards the purchase price or toward your down payment.

The buyer's goal of a rent to own home should be that during the period of the lease the buyer is working carefully to clear up credit issues with a mortgage officer or some other type of credible representation, and is able to qualify and transition into the homeowner when the lease agreement ends.

Another advantage of renting to own is that if the market continues to tumble, you don't have to take that home at the previously agreed price. If you've worked to get yourself pre-qualified, a seller may re-negotiate the sales price, or you can look for a better home. In that case you usually forfeit any money you put down, so be sure to educate yourself on rent to own home sales and be aware of the potential pitfalls to avoid.

In the long run it is most likely cheaper for people to own their own homes than it is to rent, but since renting usually precedes owning, try to take advantage of that time establishing a two-year work and residential history, correct any outstanding credit issues and, if it works for you, take advantage of a rent to own home opportunity.


Street Talk

No comments present
You May Also Like
Remaining Friends With Your Ex - Is It Wise?
The end of a relationship is usually complete with unimaginable pain and a sense of tremendous loss. You desperately want to cling to anything that could act as a Band Aid to your hurt and accepting your ex's offer of friendship seems like it could be a useful anesthetic. The…
By: Isabella Rose in  Relationships  >  Friendship   Nov 10, 2012  
0
  Likes: 1

How to earn online
How to earn online – a personal testimony I know a ‘mature student’ who wishes to remain anonymous, who had invested a lot in his career. He has 4 degrees, among them an MBA and a PhD. He has a lot of experience and was accustomed to earning a very…
By: Jerry in  Internet and Businesses Online  >  Internet Marketing   May 10, 2011  
0
  Likes: 1

Wall Air Conditioner And 3 Other Tips to Beat the Summer Heat
It can be very torturing to have no wall air conditioner in your room during the summer night. The hot weather can make you feel so uncomfortable due to the heat and the perspiration of your body. You may experience sleepless nights and your day job can be at stake…
By: Jeff Boo in  Home Improvement  >  Heating and Air Conditioning   Dec 11, 2011  
0
  Likes: 0

Four Questions to Ask Yourself Before Buying A Digital Camera
Shopping for a new digital camera can be overwhelming. As with other forms of technology, cameras evolve quickly and more and more terms are being used to describe the plethora of features that today's sophisticated digital cameras have. Before getting caught up in the hype about the latest features, take…
By: Marie Schramke in  Arts and Entertainment  >  Photography   Dec 08, 2011  
0
  Likes: 3

Gold Vs Silver: Which Is The Better Investment
Should you buy gold or silver If you’d bought 1ounce of gold 10 years ago you would have paid less than $300, today's gold price is over $1600. In 2006 1ounce of silver would buy over 4 gallons of gasoline, today it will buy over 10 gallons. It seems evident…
By: Penny Black in  Investing   Apr 13, 2012  
22
  Likes: 5

Best Ways to Make Money Online - The Tip Of the Ice Berg
Some of the best ways to make money online are often overlooked. The Internet is proving to be one of the most powerful tools ever made. Not only as an information platform but also as a powerful money- making machine. Don't think of using it as a way of just…
By: Greg Rogers in  Internet and Businesses Online  >  Internet Marketing   Jan 22, 2012  
0
  Likes: 1

Buying Your Place In the Sun
So you have decided that you want to buy a vacation holiday home, perhaps you have just been on holiday somewhere and really liked the place and decided that something more permanent would be desirable. There could be a multitude of reasons for this, you have a young family and…
By: Innes Hutton in  Travel and Leisure  >  Vacation Homes   Aug 16, 2011  
0
  Likes: 0

New Mobile Telephone Critiques
From pros to novices, knowing how to invest correctly can help you make money in stocks. There is more to good results than buying at a low price and selling when the price is high. Keep reading this article to maximize your success in the stock market. Start your career…
By: Brian Walker in  Business   May 08, 2013  
0
  Likes: 0

Cost Of Solar Panels And the Savings they Can Make
When trying to analyze the costs of installing solar panels, you must make sure to include all the significant costs associated with it. Meaning, you should not only include the material and installation costs, but also the maintenance costs as well as the savings that it will make in the…
By: lee8 in  Home Improvement  >  Green Living   Jul 08, 2012  
0
  Likes: 0

Top 3 Tips To Buying A Digital Camera
When it comes to the market for cameras there are thousands of choices to select from. So many brands, so many different varieties, with vastly different capabilities and price ranges. Deciding to purchase one without a proper plan or target in mind will result in you either getting something that…
By: Craig Ferdinands in  Arts and Entertainment  >  Photography   Mar 13, 2011  
0
  Likes: 0

Smart Investing Made Easy- Finding Out Your Mutual Fund Performance
Through mutual funds, you are able to invest your money in order to secure a brighter future. There are several different aspects which need to be addressed before actually investing in any particular mutual fund. By reviewing a mutual fund performance, you will be able to judge the position of…
By: Don Meyer in  Investing  >  Mutual Funds   May 16, 2011  
1
  Likes: 1

Exacerbated College Loans Verses the Real Estate Overcapitalization Of 2007 - 09 Recession
If the economy is seen from the prospective of a marketplace with demand-to-supply balance, the over-expansion and over-capitalization of one section of this market (exampled by the pre 2007-9 recession’s real estate), which overcapitalization could not be dispersed or balanced by other sections, which are by themselves in a slow-growth…
By: Joshua Ioji Konov in  News and Society  >  Economics   Jul 30, 2012  
0
  Likes: 0

Housing Poblems In The USA
America's economy faces several serious problems like unemployment, huge debt servicing, health issues, and education, but the worst of these is the housing problems in the USA. The housing prices were at their highest in the early months of 2006, but from the mid 2006, there is a steady dip…
By: Winston Hackshaw in  News and Society  >  Economics   Jun 02, 2011  
1
  Likes: 1

Custom Home Builders In Burlington NC - Building Your Dream Home
Do you have a lot in Burlington NC? It’s time to build your dream home. Don’t settle for pre-fab homes that will actually cost you more in the long run. When you hire custom home builders, every part of your house can be personalized depending on your preferences and needs.…
By: Aaron Garner in  Real Estate  >  Building a Home   Jun 07, 2016  
0
  Likes: 0

Find Premium Quality Home Builders In Fayetteville NC
Planning on getting your very first home? Are you planning to move to a new home in Fayetteville NC? Contact a home builder today. You can find many home builders in Fayetteville, but not all of them will be able to offer high-quality service. Here are some ways to search…
By: Aaron Garner in  Real Estate  >  Building a Home   Jun 07, 2016  
0
  Likes: 0

Article Views: 2707    Report this Article